Retirement planning for Americans is a sad story. Looking at this chart from Kiplinger, it is no wonder most Americans are in a precarious position during their golden years.
The $1,000,000 retirement figure may seem high, even by most conservative estimates. However, with inflation, higher taxes and health/insurance cost soaring in the next few years, I don't think it is a wild estimate.
Growing our retirement nest will prove tricky though. For those who find stocks too volatile, they can sit on cash or invest in fixed income assets. However, you can't get rich or attain that $1 million target with the pathetically low interest rates on fixed income investments.
The situation becomes even more dire if lower wages become the norm and our homes, the most valuable assets, cannot recover from the housing market downturn.
Currently, the money market fund is paying less than 1%, and municipal bonds are in low single digits. By holding interest rates low and ramping up money supply, the Federal Reserve is actually punishing savers and retirees while rewarding risk takers.
The banks borrowed money from the Fed via the TARP program for close to 0%, and invest it in risk free Treasuries, proprietary trading, mortgage loans, as well as charging taxpayers sky high interest on their credit cards!
If we can get 8-10% interest on our savings account, we may require less than a million dollars to retire. Unfortunately, savers like us do not have access to TARP money to speculate.
What we can do is to save as much of our income during our working life. Living a high life with borrowed funds, just to keep up with the Joneses is a no-no. And get used to the idea of retiring later.
Sunday, May 30, 2010
Tuesday, May 25, 2010
A recent poll reveals that 74% of voters are extremely concerned about the current level of government spending and 58% feels it is unsustainable.
Is Washington bankrupting America? The public is clearly concerned.. and we are talking only about past spending…
The US government owes $106 trillion in future spending commitments, don't ask me where or how they are gonna get the funding..
The interest payment on debts are going to reach dizzying heights and raise the possibility of America defaulting on its debts.
Politicians and Americans will have to make tough choices about debt reduction. Increasing taxes to pay for government irresponsibility is not a solution.
Real spending reform is needed. Household spending has risen 40% in the last decade and the trend will continue in the next 10 years. Returning to the 1990s spending level would help to balance the budget and reduce debts.
Tuesday, May 18, 2010
Next time you go shopping for groceries, why not drop by an Asian supermarket? Seems like there are very cheap prices for fruits available.
Saturday, May 15, 2010
Going to extremes in saving money actually do you more harm than good. It is similar to adopting a crash diet where you suffer from yo-yo weight gain and loss.
Your life also becomes miserable when you cut every non-essential cost from monthly expenses. This means eating instant noodles and leftovers, no entertainment, no socialising, wearing tattered clothes, etc.
I don't know how you can sustain such a miserly and boring lifestyle... I can't and it defeats the objective of saving money and building a retirement nest over the long term.
Worse still, such extreme saving may drive people back to their old spending habits with a vengeance. Just temptation of juicy steak and wild parties after eating beans or staying home for a month.
A successful money saving plan involves a healthy and balanced approach where you review your spending, identify areas of high expenditure and find ways to make savings, without necessarily having to cut back completely on everything.
You can go out with your friends twice a month, rather than every week or supplementing some expensive dinners with cheaper dinners in your weekly shopping.
By balancing your savings against your spending, you do not then deprive yourself completely, making it much easier to continue saving in the long-term.
Monday, May 10, 2010
Don't you just hate it when your ink catridges run dry when you are in the midst of churning out an important report? The disappearing ink gets even more "farcical" when you have kids at home doing school projects (all the colorful pages) and your wife runs a home business.
If you are like me, you probably have to replace ink cartridges frequently and needless to say, it is an expensive affair. There is a report which reveals that nearly 300 million ink cartridges wind up in landfills annually.
You can work out how much printer companies are profiting from ink catridges. However, there are several tips you can use to reduce the landfill and save money in the long run.
1. Use refillable ink cartridges
During printing, streaking is an indicator that the cartridge is running out of ink. This is the perfect time for a refill, instead of waiting till the cartridge is wasted entirely.
Refilling ink cartridges can be messy but well worth the effort. If you don't know how to do it, a number of stores (Walgreens, Office Max or your local photo retail) will refill them for you.
However, not all ink cartridges are refillable. When buying printers, check if the ink cartridges can be refilled.
2. Recycle finished cartridges
Many libraries, scouting programs, schools and office supply stores facilitate the recycling of ink cartridges. Don’t trash them; recycle.
3. Print Preview
By simply previewing your document before printing, you can catch formatting errors and typos that will eliminate the need to reprint documents later. Do not skip this simple process if you want to save paper, ink and money.
4. Printing limits
If unsupervised, most kids will make endless prints from their favorite sites. Set a clear limit on the number of pages your children are allowed to print each day.